gita renewable energy ltd share price Management discussions


ECONOMIC REVIEW Global Economy

Global economic activity is experiencing a broad-based and sharper-than-expected slowdown, with inflation higher than seen in several decades. The cost-of-living crisis, tightening financial conditions in most regions, Russias invasion of Ukraine, and the lingering COVID-19 pandemic continue to weigh heavily on the outlook.

Russias invasion of Ukraine stoked inflationary concerns as supply chain disruptions remained a threat. Food and energy prices are likely to be volatile even as interest rates in most parts of the world are on the rise. Structural reforms across economies can further support the fight against inflation by improving productivity and easing supply constraints, while multi-lateral cooperation is necessary for fast-tracking the green energy transition and preventing fragmentation. The International Monetary Fund believes the worst of the economic pain is yet to come.

https://www.imf.org/en/Publications/WEO/Issues/2022/10/11/world-economic-outlook-october-2022.

https://www.forbesindia.com/article/take-one-big-story-of-the-day/dawn-of-2023-a-cautious-world-economy/82093/1.

Outlook

Global growth is expected to fall to 2.9% in 2023, but will rise to 3.1% in 2024. The forecast of January 2023 World Economic Outlook Update is 0.2% higher than that predicted in the October 2022 World Economic Outlook, but below the historical average of 3.8%. Chinas recent reopening has paved the way for a faster-than-expected recovery. Global headline inflation is set to fall from 8.7% in 2022 to 7.0% in 2023 on the back of lower commodity prices.

https://www.imf.org/en/Publications/WEO/Issues/2022/10/11/world-economic-outlook-october-2022.

Monetary policy should stay the course to restore price stability, and fiscal policy should aim to alleviate the cost-of-living pressures, while maintaining a sufficiently tight stance aligned with monetary policy.

The 10-year economic outlook signals a prolonged period of disruptions and uncertainties for businesses, but there are also opportunities. Global growth will return to its slowing trajectory once the 2022-2023 regional recessions end, with mature markets making smaller contributions to global GDP over the next decade. Keys to ensuring growth over the longer term include developing new lines of business; strengthening corporate culture; embracing digital transformation and automation; recruiting for talent with new skills not currently represented in the company; and maximising the hybrid work model.

https://www.conference-board.org/topics/global-economic-outlook.

Indian Economy

India is expected to grow between 6.5% and 6.9% in FY 2022-23, which is relatively stronger in comparison to other large economies and its emerging market peers. In its credit policy meeting in December, Indias central bank reduced its growth forecast for FY2023 to 6.8% from its earlier estimate of 7.8%. India is already the fastest-growing economy in the world, having clocked 5.5% average GDP growth over the past decade. Now, three megatrends - global offshoring, digitalisation and energy transition - are setting the scene for unprecedented economic growth in the country of more than 1 billion people.

Outlook

Despite the challenges, India is gaining power in the world order and is on track to become the worlds third largest economy by 2027, surpassing Japan and Germany, and have the third largest stock market by 2030, thanks to global trends and key investments the country has made in technology and energy. Indias GDP is likely to more than double from US$ 3.5 trillion today to surpass US$ 7.5 trillion by 2031. A Morgan Stanley report predicts that India will be one of the only three economies in the world that can generate more than US$ 400 billion annual economic output growth from 2023 onwards, and this will rise to more than US$ 500 billion after 2028.

INDUSTRY OVERVIEW

Global Renewable Energy Industry

Amid the major changes taking place, a new energy security paradigm is needed to ensure reliability and affordability while reducing emissions. The declining fossil fuel and expanding clean energy systems co-exist, since both systems are required to function well during energy transitions in order to deliver the energy services needed by consumers. And as the world moves on from todays energy crisis, it needs to avoid new vulnerabilities arising from high and volatile critical mineral prices or highly concentrated clean energy supply chains.

The environmental case for clean energy needed no reinforcement, but the economic arguments in favour of cost-competitive and affordable clean technologies are now stronger and so is the energy security case. Todays alignment of economic, climate and security priorities has already started to move the dial towards a better outcome for the worlds people and for the planet.

India Renewable Energy Market

The world is rapidly switching to renewable energy. As climate change is causing huge shifts in the industry, countries are trying to decarbonise the energy sector by 2050. In India, with about 300 sunny days a year, the renewable energy incidence can reach up to 5 EWh/year. It is also estimated that the solar energy available in a single year exceeds the possible energy output of all of the fossil fuel energy reserves in India.

India is well positioned to take climate leadership as a prime example on the possibilities of enabling clean power generation by unleashing solar power. Renewable energy dominated Indias power generation capacity growth in 2022. The country added 13.9 GW of solar capacity in 2022, which is as much solar capacity as UKs entire solar fleet in 2021. With this, the total solar capacity in India stood at ~62 GW. Rajasthan and Gujarat, the top two states in solar deployments, together added 8.6 GW in 2022, slightly more than Turkeys entire solar fleet in 2021. Installations in all other states combined were also sizable at 5.3 GW, larger than Chiles entire solar fleet.

COMPANY OVERVIEW

GITA Renewable Energy Limited (GREL/ the Company) is a global pure-play, end-to-end renewable engineering, procurement and construction (EPC) solutions provider. Its key focus is to provide project design and engineering and to manage all aspects of project execution - from conceptualising to commissioning. It also provides Operations & Maintenance (O&M) services for own projects and those constructed by third parties.

Internal Control Systems

Internal control systems continued to function as effectively as in the past. Top management and the Board of Directors and the Committees thereof continue to be actively involved in ensuring that all controls work as intended.

Financial and Operations Performance

The Companys revenue from operations for the year under review is Rs. 21,00,000 during the period 2022-23 and 2021-22 signifying an decrease of 12.35%. The decrease in revenue during the year under review is attributed to the decrease in the Investment activities. The operating profit has also seen down during the year under review.

The Company has identified the following as Key Financial Ratios:-

Particulars Unit of Measurement 31-Mar-23 31-Mar-22 Variation in %
Current Ratio In multiple 3.61 19.96 (16.35)
Debt-Equity Ratio In multiple

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1.66 (1.66)
Debt Service Coverage Ratio In multiple

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Return on Equity Ratio In % 1.91 3.15 (1.24)
Inventory Turnover Ratio In Days

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Trade receivables Turnover Ratio In Days

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Trade payables Turnover Ratio In Days

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Net Capital Turnover Ratio In Days

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Net Profit Ratio In % 88.58 72.88 15.70
Return on Capital Employed In % 382.21 84.71 297.50
Return on Investment (Assets) In % 110.74 60.09 50.64

The Company does not have any debt/ borrowings, hence disclosure of Debt-Equity Ratio is not applicable.

Ratios where there has been a significant change from FY 2021-22 to FY 2022-23 are explained below :-

1. Debt equity ratio become decreased in to negative figure during the year

2. Return on equity shares also decreased from 3.91 % to 1.91% during the year.

3. The Net Profit ratio increased from 72.88% to 88.58% during the year.

4. The return on capital employed increased from 84.71% to 382.21% during the year.

5. The return on Investment also increased from 60.09% to 110.74% during the year.